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Tuesday, 14 October 14
KING COAL UNDER ATTACK? - EVA TZIMA
 With the last quarter of the year being well underway and with no strong signs that the Dry Bulk market could be ready for a big positive reversal, everyone is thirsty for market developments that could more clearly set out the path of freights in the following months. While most of the attention on the dry bulker side is usually placed on iron ore around this time of the year, coal recently made head-lines as well, following the new policies set in place by the Chinese government in relation to its trade. As the country remains the world’s biggest producer and consumer of coal, recently announced plans to set a floor on the quality of coal consumed domestically, has brought the Asia Pacific dry bulk trade to the spotlight.
The Chinese government has during the past years tried to pursue more environmentally friendly policies and coal consumption has been one of the main issues those policies have tried to tackle. Up until recently the pledge to reduce coal usage in the Chinese energy mix, without nevertheless setting a specific limit of coal consumption, has been the only solid promise by the government to intervene in the trade of the commodity. Earlier this year though the country’s administration started considering a ban on lower-quality coal imports and despite the fact that different versions of this policy were being drafted since 2013, it was only a few weeks ago that the final regulation was set out. So what is the impact on imports and most importantly; are dry bulk rates in the Pacific due for another hit?
As China ranks second amongst those countries with the biggest coal reserves internationally, the country’s need to import coal has been inextricably linked with its continuously growing appetite for the commodity, as well as the fact that importing coal would come cheaper compared to producing it and transporting it domestically, since the main coal producing provinces are located far from the major coal consuming city centres. While S. Africa also managed to get a piece of the pie in the most recent years, Indonesia and Australia have been traditionally those countries satisfying the largest portion of Chinese imports.
The new regulations, which are set to come into effect as soon as January 1st 2015, will restrict the import and local sale of coal with ash content over 16% and sulphur content over 1%, in main Chinese population centres, while a total ban will be imposed on the sale, transportation and import of coal in cases where ash and sulphur content exceed 40% and 3% respectively.
At a first glance, with the biggest chunk of Australian coal having an ash content of more than 20%, it seems that Chinese coal imports from the Land Down Under will be the ones that could take a hit. Panamax up to Capesize range vessels are usually the ones facilitating this trade, so pressure on rates for these segments is logically expected. Whether this pressure is going to last is still questionable at this stage though. We could well see sooner rather than later coal producers in Australia invest in upgrading the quality of their production to meet the new quality standards, while even in the case that they don’t, Australian production could most probably be directed towards countries like India that has been displaying growing appetite for coal.
At the same time, as quality restrictions also apply to Chinese domestic production, the time it will take for local producers to adjust to the new standards could also be a period during which imports will have to remain strong. Since the majority of Indonesian production is meeting the recently announced quality standards, China will most probably turn to Indonesia to increase its imports. Although there is a chance that Indonesia’s own recent regulations with regards to export permits could possibly delay some of the upside created by the squeeze out of Australian exports, once these issues are streamlined, we could soon see Supramax rates that facilitate this trade enjoying some nice upside, while Ultramax rates could also benefit as this segment is expected to get a piece of that trade as well in the near future.
So even though in the short to medium term Australian exports to China might take a hit, seaborne coal trade volumes in the Pacific could soon find their balance back. Australians might improve the quality of their production and lure back demand ex China, or they could shift their imports to countries like India limiting the downside on Panamax – Cape rates. On top of that, coal exports to China from other countries, like Indonesia, might intensify, boosting earnings for Supramax/Ultramax tonnage.
Some argue that what could actually hurt Chinese growth of coal usage is the growth rate of coal intensive sectors in the country. The growth in industries like those of crude steel, cement, and pig iron, which are heavily using coal as an energy source, has slowed down and that could also put pressure on coal volumes. But in my opinion, as these sectors are bound to continue operations, despite any short or longer term growth squeeze, they will still remain dependent on coal and the fact that their profit margins might stay under pressure, will be exactly what will support the usage of coal, which still re-mains one of the cheapest options for energy out there, a knowledge well adopted across the Asia Pacific region.
Compiled by:
Intermodal Research & Valuations
Analysts:
Mr. George Lazaridis
Ms. Eva Tzima
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Sunday, 14 September 14
FREIGHT RATES RALLY AS DEMAND INCREASED
COALspot.com: The Baltic Dry Index (BDI) is a number (in US$) issued daily by the London-based Baltic Exchange up 2.25 percent week on week. BDI cl ...
Friday, 12 September 14
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALED 673.3 MMST, SAYS EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.20 million short tons (mmst) of coal in ...
Thursday, 11 September 14
THE PANAMAX MARKET IS TAKING A BREATHER - FEARNLEYS
Handy
We have experienced more activity in both hemispheres this week, said Fearnleys in this week's weekly report.
"We see rates c ...
Wednesday, 10 September 14
ARE GREEK BANKS ON THE VERGE TO START LENDING AGAIN? - JOHN N. COTZIAS
It is well known that Greek Banks had suffered severely after the economic crisis of 2008. From that period onwards, major changes have occur ...
Tuesday, 09 September 14
WEAK M&A DESPITE ABUNDANT DISTRESSED INDONESIA COAL ASSETS - FITCH RATINGS
COALspot.com: Fitch Ratings says that a meaningful level of merger and acquisition (M&A) activity leading to a consolidation of the coal sector ...
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- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- Electricity Generating Authority of Thailand
- Australian Coal Association
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- White Energy Company Limited
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Economic Council, Georgia
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
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